Vernon L. Smith is the main creator of the burgeoning discipline of experimental economics. This collection of his papers from 1962 to 1988 surveys major developments in the field from early attempts to simulate economic behavior in now classic double oral auction markets through recent studies of industrial organization and decision making. Topics covered include monopoly and oligopoly supply and demand theory under posted pricing, uniform pricing, double continuous auction, and sealed bid-offer auction; hypothetical valuation and market pricing; asset price bubbles; predatory pricing; market contestability and natural monopoly; and the methodology of experimental economics. Taken together, the papers form a history of the study of economics under controlled conditions. Vernon Smith is Regents Professor of Economics at the University of Arizona, and is the author of over 100 articles and books on capital theory, finance, natural resource economics, and experimental economics. He is president of the Public Choice Society and past founding president of the Economic Science Association.
Preface; Acknowledgments; Part I. The Formative Years: Introduction; 1. An experimental study of competitive market behaviour; 2. Effects of market organization on competitive equilibrium; 3. Nature, the experimental laboratory, and the credibility of hypotheses with D. B. Rice; 4. Experimental auction markets and the Walrasian hypothesis; 5. Experimental studies of discrimination versus competition in sealed-bid auction markets; 6. Experimental economics: induced value theory; 7. Bidding and auctioning institutions: experimental results; 8. Intertemporal competitive equilibrium: an empirical study of speculation with R. M. Miller and C. R. Plott; 9. Experimental economics at Purdue; Part II. Institutions And Market Performance: Introduction; 10. On nonbinding price controls in a competitive market with A. W. Williams; 11. An experimental comparison of alternative rules for competitive market exchange with A. W. Williams; 12. Competitive market institutions: double auctions vs. sealed bid-offer auctions with A. W. Williams, W. K. Bratton and M. G. Vannoni; 13. Markets as economisers of information: experimental examination of the 'Hayek Hypothesis'; 14. The effect of rent asymmetries in experimental auction markets with A. W. Williams; 15. Microeconomic systems as an experimental science; 16. Experimental economics; 17. A comparison of posted-offer and double-auction pricing institutions with J. Ketcham and A. W. Williams; 18. Hypothetical valuations and preference reversals in the context of asset trading with M. Knez; 19. Bubbles, crashes, and endogenous expectations in experimental spot asset markets with G. L. Suchanek and A. W. Williams; Part III. Public Goods: Introduction; 20. The principle of unanimity and voluntary consent in social choice; 21. Incentive compatible experimental processes for the provision of public goods; 22. An experimental comparison of three public good decision mechanisms; 23. Experiments with a decentralised mechanism for public good decisions; 24. Experimental tests of an allocation mechanism for private, public or externality goods with D. L. Coursey; Part IV. Auctions And Institutional Design: Introduction; 25. Incentives and behaviour in English, Dutch and Sealed-bid auctions with V. M. Coppinger and J. A. Titus; 26. Theory and behaviour of single object auctions with J. C. Cox and B. Roberson; 27. A test that discriminates between two models of the Dutch-first auction non-isomorphism with J. C. Cox and J. M. Walker; 28. Theory and behaviour of multiple unit discriminative auctions J. C. Cox and J. M. Walker; 29. Theory and individual behaviour of first-price auctions J. C. Cox and J. M. Walker; 30. A combinatorial auction mechanism for airport time slot allocation with S. J. Rassenti and R. L. Bulfin; 31. Designing 'smart' computer-assisted markets with K. A. McCabe and S. J. Rassenti; Part V. Industrial Organization: Introduction; 32. An empirical study of decentralised institutions of monopoly restraint; 33. Natural monopoly and contested markets: some experimental results with D. Coursey and R. M. Isaac; 34. In search of predatory pricing with R. M. Isaac; Part VI. Perspectives On Economics: 35. Theory, experiment and economics; 36. Experimental economics: behavioural lessons for microeconomic theory and policy.